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1. Introduction
Open innovation is a process that allows innovation knowledge and resources flowing freely either inwardly or outwardly, and it has become a dominant approach for revitalizing a company’s innovation processes (Garriga et al., 2013; Chesbrough, 2003). While academics have recognized the importance of open innovation strategies, as evidenced by a large amount of studies devoted to this subject (Wu et al., 2016; Manzini et al., 2017; Camerani et al., 2016; West et al., 2014), there are still gaps in the literature that work endeavor to fill. Most studies find that open innovation improves firm performance but highlight the importance of considering various contingencies, such as strategic orientation (Cheng and Huizingh, 2014), social capital (social network) (Sisodiya et al., 2013), as well as environment turbulence (Hung and Chou, 2013). The resource-based view (RBV) maintains that a firm’s existing capabilities are the bases for which it further develops and strengthens its competitive advantage (Barney, 1991; Amit and Schoemaker, 1993). Considering the wide array of the research of potential contingencies, it is surprising that few studies paid attention to the role of firm’s functional capability and such studies have mainly focused on the impact of individual capabilities (e.g. R&D, absorptive). In addition, although open innovation comprises two forms, namely, inbound (focus on external technology acquisition) and outbound (external technology exploitation) (Chesbrough and Crowther, 2006), previous research has mainly focused on one dimension or summed across these two forms of open innovation to create a single construct (Lee et al., 2015; Scuotto et al., 2017). There is limited literature simultaneously offers quantitative empirical analyses of the subtle influence of the two open innovation dimensions on firm performance.
This study attempts to address the aforementioned research gaps in the extant open innovation literature. We develop a conceptual framework on firm capabilities to provide novel insights into specific ways in which technological and market information management capabilities may increase the impact of two different open innovation strategies on firm performance. Specifically, the objectives of our study are twofold. First, we propose that the effects of open innovation and firm performance are dependent on the technological capability. As open innovation deal with the inflows (inbound open innovation) and outflows (outbound open innovation)...